China vows to hit back over new US tariffs

China bull

China bull

The US has suggested that it may ultimately impose tariffs on $500 billion worth of Chinese goods, or roughly the entire amount of US imports from China.

That means that U.S. companies working inside of China may be about to feel the wrath of the Chinese government - and consumer. Imposing taxes on another US$200 billion worth of products will raise the costs of every day goods for American families, farmers, ranchers, workers, and job creators.

The tech sector, more broadly, will suffer from tariffs due to the nature and complexity of the global supply chain that it relies on.

In Beijing, Li Chenggang, assistant minister at China's Commerce Ministry, said at a forum in Beijing that the latest USA proposals interfered with the globalisation of the world economy and that China's support for a multilateral trade system would not change.

China gave no details, but it has plenty of options to retaliate that could extend beyond additional tariffs on USA imports.

President Donald Trump has threatened higher tariffs on more than US$500 billion of goods, or almost all of China's annual exports to the United States.

USA officials issued a list of thousands of Chinese imports the Trump administration wants to hit with the new tariffs, including hundreds of food products as well as tobacco, chemicals, coal, steel and aluminum.

"The Chinese government as always will have no choice but to take the necessary countermeasures", said China's ministry of commerce in a statement, without elaborating further.

President Donald Trump vowed to hit back on a growing list of products after China retaliated in kind for the first round of 25 percent tariffs on $34 billion worth of imports that Washington imposed last week.

The first USA tariff list focused on Chinese industrial products, an attempt to reduce the direct impact on American consumers.

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Reuters reported that China's commerce ministry called the new tariffs "completely unacceptable", adding that it was "shocked" and would file a complaint with the World Trade Organization.

"For over a year, the Trump Administration has patiently urged China to stop its unfair practices, open its market, and engage in true market competition", Lighthizer says.

Beijing has said it would hit back against Washington's escalating tariff measures, including through "qualitative measures", a threat that US businesses in China fear could mean anything from stepped-up inspections to delays in investment approvals and even consumer boycotts.

China "cannot match fresh US tariffs", Vishnu Varathan of Mizuho Bank said in a report.

The tariffs will not be imposed until after a two-month period of public comment on the proposed list, but some United States business groups and senior lawmakers were quick to criticize the move.

'Tonight's announcement appears reckless and is not a targeted approach, ' Senate Finance Chairman Orrin Hatch said. "Tariffs threaten to boomerang on the very workers they're supposed to help, and will only further undermine the confidence manufacturers need to make investments in new equipment, facilities and people".

The heightened trade tensions pose risks to South Korea, Asia's fourth-largest economy, as both the United States and China are the country's major trading partners.

"Tariffs are taxes, plain and simple".

According to its detailed notice on the process to come, USTR aims to conduct hearings in late August, which means that the earliest possible implementation date for the additional $200 billion in tariffs can be in September.

South Korea's government has weighed in this morning, warning that its exports could be hurt by the escalating dispute between Washington and Beijing.

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